City of Los Angeles Mills Act Program | Los Angeles Conservancy
Eastern Columbia Lofts in DTLA, a Mills Act recipient. Photo by Adrian Scott Fine/L.A. Conservancy

City of Los Angeles Mills Act Program

UPDATE: On December 1, 2022, the City's Office of Historic Resources (OHR) provided updates to the Cultural Heritage Commission on the City’s Mills Act Program, and a status update on proposed amendments. OHR is anticipated to provide a second update before the second half of 2023. Learn more about L.A.’s Mills Act Program and the Conservancy's position below.    

On September 15, 2022, the Conservancy submitted comments to the City of Los Angeles for their City's Mills Act Program Assessment and Equity Analysis (Assessment). To learn more about our statement click the "Our Position" tab and read our full comment letter. 

The City has initiated the process to assess the Assessment's recommendations and determine which ones might move forward through a formal amendment to the Mills Act program.

We strongly encourage all interested parties to submit your feedback and thoughts directly to the City as they determine which recommendations to move forward when the Mills Act program is reactivated in the near future. 

The Mills Act program is one of the most powerful historic preservation incentives for property owners. Enabled by state legislation in 1972 and adopted by the City of Los Angeles in 1996, the Mills Act offers a property tax abatement through a revolving 10-year contract between the City and the property owner, with automatic renewal each year. These contracts are transferred to new ownership when the property is sold. Since 2020, the City has not accepted new contracts while the program was assessed.

Today, combined Mills Act property owners in Los Angeles save over $20M in taxes. These savings are meant to be reinvested into rehabilitating and maintaining historic properties.

Due to the success of the program, the total number of contracts has expanded beyond the capacity of City staff to properly administer the program. In 2020, Los Angeles City Planning contracted with historic preservation consultant Chattel, Inc. and sub-consultant AECOM to conduct a comprehensive assessment to evaluate the program and provide recommendations for future viability. The assessment analyzes staffing requirements, revenue streams to support the program, and the allocation of property tax savings among existing contracts to inform a more equitable distribution of program participation across the City.

The assessment found that current funding is insufficient to effectively manage the number of contracts and to bring the program into complete compliance with state law. To date, the City has completed approximately only 25 percent of the inspections required annually, leaving many historic properties at risk of undergoing unpermitted alterations. Currently, the City only employs two staff, who dedicate less than half their time to the program due to other responsibilities.

A key component of the assessment looked at the program’s equity to better understand which communities have benefitted the most and least. The largest number of contracts -- 71 percent or 659 properties -- are for single-family properties located in communities facing “low barriers to opportunity.” Despite the size, only 25% of savings went to these properties. The bulk of Mills Act savings went to multi-family and commercial properties. The assessment concluded that contracts are disproportionately benefitting property owners in communities with lower barriers to opportunity with 83 percent of savings going to these communities.

Recommendations:

Through the assessment a number of recommendations were provided for program sustainability and program equity. These are broken down into goals and strategies for each. Some of the most notable recommendations include the following.

Program Sustainability

  • Expanding staffing
  • Enacting a cap of 1,500 Mills Act contracts with 25 new contracts per year
  • Revise contract term limits to be 20 years for new contracts and not renew existing contracts older than 10 years
  • Eliminate the annual threshold of unrealized property tax revenue
  • Increase pre-contract assessed value limit for single-family dwellings from $1.5 to $2.5 million and increase multifamily buildings to $10 million
  • Revise eligibility requirements to include National and California Register listed properties, SurveyLA identified eligible properties, and CPA, CPIO, and CDO identified properties.

Program Equity:

  • Retain and preserve affordable multi-family housing by prioritizing multi-family properties and adaptive reuse projects with affordable housing
  • Implement tenant anti-displacement safeguard measures
  • Expand Mills Act benefits in areas facing higher barrier to opportunity through outreach to underserved areas and lessening barrier to program participation
 
For the entire assessment and list of recommendations visit the City of Los Angeles Planning Department Mills Act webpage.

The Conservancy greatly appreciates the City for looking at new ways to make the Mills Act program more sustainable and equitable in the long-term. As the largest-operating (948 contracts) Mills Act program in California, we also recognize that amending this successful program will likely have broader implications. Other California communities, including those throughout L.A. County, will look to Los Angeles as a model, and may propose similar updates. For these reasons, it is critically important to strike a balance and ensure any amendments to the program are fully contemplated (in terms of potential, unintended consequences). The purpose of this program is to advance preservation priorities and directly assist in the physical preservation of historic resources.

While there were many recommendations offered in the Assessment, we’ve focused on several core areas that we believe warrant further consideration and attention. Below is a general summary of our position.

  • It is critically important to strike a balance and ensure any amendments to the Mills Act program are fully contemplated, in terms of potential, unintended either positive and/or negative consequences;
  • Program equity is important to ensure this program is capable of benefitting all, from participation to achieving property tax savings.
  • Establishing mechanisms by which fees are collected, tracked, and set aside is critical and generated funds should be specifically allocated within the City budget for the management and operation of this program.
  • Cancelling existing Mills Act contracts, reducing the length of period, and capping the total number of properties will leave many historic resources vulnerable in the future, and goes against the original intent of the Mills Act program; this will also likely result in irreparable harm and adverse, unintended impacts.
  • Increasing the pre-contract assessed value limit for both single-family and multi-family properties, and eliminating this for Adaptive Reuse Ordinance (ARO) properties will enable additional eligible historic places to participate in the program.
  • Expanding the eligibility criteria broadly will place more pressure on the Mills Act program, and potentially undermine the effectiveness of the HCM program; this will result in property owners receiving a benefit without being fully committed toward historic preservation priorities.
  • Greater flexibility for the Los Angeles Mills Act program, and to be more intentional and focused on priorities that matter, including DEIA and affordable housing, is a positive direction.  

Read the entirety of our Mills Act Assessment comments for more details.

First, Review the proposed recommendations and attend future hearings regarding this issue. We will add updated meeting information once they are scheduled.   

Second, contact your local Councilmember and tell them how important the Mills Act Program is to the City of Los Angeles.